Stocks’ Details

Little Green Pharma Limited

Business Update: Little Green Pharma Limited (ASX: LGP) is engaged in the cultivation and production of locally grown medicinal cannabis. The market capitalisation of the company as on 08 December 2020, stood at ~$80.68 million. In a recent update, LGP has entered into a strategic partnership with private health insurer Health Insurance Fund (HIF) of Australia, which will provide HIF members access to medicinal cannabis products through the payment of a rebate.

1QFY21 Update: The company achieved a 41% increase in unit sales compared to the previous quarter, with over 8,500 units of medicinal cannabis oil being sold. A revenue of $1.29 million was generated, during the same period. It had a comfortable cash position of $4.1 million as on 30 September 2020. Net operating cash outflow during the quarter was $234,000 compared to $753,000 in the prior quarter, mainly because of growth in sales and the timing of cash receipts and payment. LGP reported an increase of 58% to over 2,200 in new Australian patients being prescribed to the product, during the period.

1QFY21 Cash Flow from Operations (Source: Company Reports)

Outlook: The company’s success in Australian market reflects consumer acceptance and market validity. It has sale agreements with distributors in the UK and Germany for distribution of its products. LGP continues to focus on high-quality cannabis medicines to further grow its market share in future.

Stock Recommendation: LGP has started to export its product to other countries and thereby expanding its reach to other parts of the world. As per ASX, the stock of LGP gave a return of 139.22% in the past three months and a return of 50.61% in the past one month. As per ASX, the stock of LGP is trading close to its 52 weeks’ high level of $0.680. On a technical front, the stock of LGP has a support level of $0.563 and a resistance level of $0.676. Considering the current trading levels, steep price movement in past months, key risks associated with the business, we suggest investors to wait for better entry level and give an ‘Expensive’ rating on the stock at the current market price of $0.610, up by 1.666% as on December 08, 2020.

Bard1 Life Sciences Limited

Stock Consolidation: Bard1 Life Sciences Limited (ASX: BD1) is engaged in the research and development of non-invasive diagnostic tests for early detection of cancer. The market capitalisation of the company as on 08 December 2020, stood at ~$67.04 million. The company recently completed the consolidation of its securities with a record date of 2 December 2020. The securities were consolidated on the basis that every 30 shares of the company were consolidated in to 1 and hence ~2,394,530,384 securities were converted to ~79,817,679.

Other Key Update: As per a recent update, BD1 has been granted patent in China, which covers the use of the company’s hTERT antibody to address inconclusive cytology and detect damaged cells.

1QFY21 Highlights: During the September 2020 quarter, the company received hTERT product income of $77k, $48k of COVID-19 stimulus payments from both the Federal and Victorian governments, and $20k of interest. Net cash used in operating activities for the quarter stood at $1,458k. As at 30 September 2020, the company had cash balance of $8.9 million.

Financial Update: During FY20, total income saw a growth of 9% to $0.64 million from $0.59 million in FY19. The company reported a net loss of $3.25 million in FY20. Operating expenses during the year increased by 69% to $3.89 million. BD1 also reported an increase in employee benefit expenses, due to additional costs for new scientific staff.

FY20 Financials (Source: Company Reports)

Outlook: BD1 had changed its US sales strategy, in partnership with its US distributor StatLab. The focus will be to acquire high-volume customers and the company has recently gained a key customer for its in-market hTERT test. This gives the company a distinct revenue visibility in the future.

Stock Recommendation: The company has changed its sales strategy and has been focusing on acquiring high- volume clients. With the acquisition of Sienna Cancer Diagnostics on 8 April 2020, the company remains on track to leverage expansion and growth opportunities. As per ASX, the stock of BD1 gave a negative return of 8.92% in the past three months and a positive return of 2% in the past one month. As per ASX, the stock of BD1 is trading below the average of its 52 weeks’ trading range of $0.57-$1.20. On a technical front, the stock of BD1 has a support level of $0.63 and a resistance level of $0.853. Considering the current trading levels, patent approvals and revenue visibility and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.765, down by 8.929% as on December 08, 2020.

Field Solutions Holdings Limited

1QFY21 Business Update: Field Solutions Holdings Limited (ASX: FSG) is engaged in the business of developing and delivering communications products and services. It operates as a telecommunications carrier and retail service provider. The market capitalisation of the company as on 08 December 2020, stood at ~$18.56 million. As per a recent update, FSG has been awarded exclusive tender to supply managed connectivity services for the NSW Office of Sport. The company witnessed the largest quarterly increase in sales in this quarter, with a $5.2 million signing of contract revenue.

FY20 Financial Update: The company reported revenues of $10.62 million in FY20, an increase of 21% from $8.79 million in FY19. Loss for the year decreased from negative $0.53 million in FY19 to negative $0.22 million in FY20. EBITDA margins saw an improvement to 8.8% from 1.2%, during the same period. Current ratio of the company improved to 1.04x in FY20, from 0.68x in FY19.

FY20 Financials (Source: Company Reports)

Outlook: The company has diversified its revenue across retail, B2B, government and enterprise segments. As per reports, FSG is constructing five shire-wide networks in partnership with local councils and the Government, and three new telecommunication towers in partnership with Optus and the Australian Federal Government.

Stock Recommendation: Despite the unfavourable business environment due to COVID-19, FSG and its partners have resumed construction activities. It is anticipated that FSG will compete for all network activity in FY21, with incremental revenue flows expected from 3QFY21. As per ASX, the stock of FSG gave a negative return of 23.4% in the past three months and a negative return of 9.99% in the past one month. As per ASX, the stock of FSG is trading slightly above its average 52 weeks’ trading range of $0.018-$0.052. On a technical front, the stock of FSG has a support level of $.035 and a resistance level of $.041. Considering the current trading levels, steep price movement in past months, key risks associated with the business, we suggest investors to wait for better entry level and give an ‘Expensive’ rating on the stock at the current market price of $0.036, up by 2.857% as on December 08, 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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